Diageo Plc · LSE:DGE

Diageo — Merger or Acquisition (May 2012)

14 slides from Diageo's merger presentation, May 28, 2012

  1. Slide 1: Acquisition of Ypióca

    Acquisition of Ypióca 28 May 2012 Diageo has reached agreement to acquire Ypióca, the leading premium cachaça brand and certain production and distribution assets. The acquisition is a key enabler to enhance Diageo‟s Route To Market in Brazil and to broaden our participation in the emerging middle c

  2. Slide 2: Contents

    Contents CONTENTS  Overview Page 3  A snapshot of Brazil Page 4  The TBA market in Brazil Page 5  Cachaca Page 6 - 8  Ypióca Page 9 - 10  Diageo and Ypióca Page 11 - 12 2

  3. Slide 3: Overview

    Overview  Diageo has reached agreement with Ypióca Agroindustrial Limitada to acquire the leading premium cachaça brand, Ypióca  The acquisition of Ypióca gives us the leading premium brand in the largest local spirits category. It will also provide Diageo with an enhanced platform from which to a

  4. Slide 4: Brazil Market

    Brazil Market  Brazil is the world‟s 6th largest POPULATION EVOLUTION (2003 – 2010) economy 173MM 186MM 191MM Consumer Annual family spending (2010) income (US$) 2% 3% 5%  Per capita income is forecast to 5% 10% increase consistently at 4% over the A 20% 66,984 27% next 5 years (despite slowing GD

  5. Slide 5: TBA in Brazil

    TBA in Brazil  The Brazilian TBA market  totals 1.4bn 9 litre cases and BRL 9bn (£2.9bn) sales revenue  with 53% TBA penetration of the LPA population  dominated by beer with 89% volume share and 51% LPA penetration  followed by spirits with 8% volume share  Cachaça is the largest volume, reve

  6. Slide 6: Cachaça

    Cachaça  CACHAÇA is the national drink of Brazil and is embedded into the Brazilian culture.  It is consumed across all demographic segments, LPA age groups and regions  It is a spirit distilled from fermented sugarcane juice  It is also the base of Brazil‟s national cocktail, the “caipirinha” 

  7. Slide 7: The Cachaça category

    The Cachaça category Volume Volume market share  The market is relatively fragmented. Top („000 9L cases) four companies account for approximately 94,471 89,219 85,749 half of the category 100% 90%  Cachaça is the second fastest growing 80% 53% 53% 51% spirits category by revenue (+11%) with 70% p

  8. Slide 8: Premium Cachaça

    Premium Cachaça  Whilst volumes in the Volume 5 yr volume standard segment declined, share growth the premium* segment is Premium* 2% 11% growing at +11% (5 year CAGR) Standard 98% (3)%  Premium* cachaça currently Volume Volume represents only 2% of the share of share of cachaça category volume To

  9. Slide 9: Ypióca

    Ypióca  An exciting heritage brand with large scale  Well placed to benefit from premiumisation trend as 100% of its brands priced above the category average  8% market share of the total cachaça category by volume  Leader in the premium segment with 62% market share by volume*  Ypióca Premium*

  10. Slide 10: Ypióca Innovations

    Ypióca Innovations Straw Ypióca Ypióca Ypióca Ypióca Flavoured Ypióca Ypióca with Gold 150 Sport 160 Ypióca can guaraná ~1950 1996 2002 2006 2006 2009 2010 Market Price ~R$15 ~R$35 ~R$4 ~R$65 ~R$14 R$1.7 ~R$13 The flagship 150th Individual 160th Lemon and red The first can With only of the anniversa

  11. Slide 11: What Ypióca brings to Diageo

    What Ypióca brings to Diageo  Expands portfolio with a premium brand in the growing segment of the main local spirits category in Brazil  Enhances access to middle class consumers by expanding our brand portfolio  Improves distribution of current and future Diageo products targeted to middle clas

  12. Slide 12: What Diageo brings to Ypióca

    What Diageo brings to Ypióca  Through accelerated and focused investments we believe we can transform Ypióca within the next 5 years into the number one cachaça brand in value terms in Brazil through - ̶ Leveraging our proven brand building and innovation capabilities ̶ Building on the existing pre

  13. Slide 13: For further information on Diageo, please visit the Investors section

    For further information on Diageo, please visit the Investors section of: Diageo.com The Investor Relations team can be contacted on: +44 (0)20 8978 4267 or by email at: investor.relations@diageo.com 13

  14. Slide 14: Cautionary statement concerning forward-looking statements

    Cautionary statement concerning forward-looking statements This presentation contains „forward-looking‟ statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking statements include all statem

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